1. Evaluation of Medicare’s Bundled Payments Initiative for Medical Conditions. Karen E. Joynt Maddox, E. John Orav, Jie Zheng and Arnold M. Epstein. N Engl J Med 2018;379:260-9. https://www.ncbi.nlm.nih.gov/pubmed/30021090
2. Medicare ACO Program Savings Not Tied to Preventable Hospitalizations or Concentrated among High-Risk Patients. J. Michael McWilliams, Michael E. Chernew and Bruce E. Landon. Health Affairs 36:2017;2085–2093. https://www.ncbi.nlm.nih.gov/pubmed/29200328
3. Care patterns in Medicare and their implications for pay for performance. Pham, H. H., D. Schrag, A. S. O’Malley, B. Wu, and P. B. Bach. New England Journal of Medicine 2007; 356(11):1130-1139. https://www.ncbi.nlm.nih.gov/pubmed/17360991
4. Time Out — Charting a Path for Improving Performance Measurement. Catherine H. MacLean, Eve A. Kerr and Amir Qaseem. N Engl J Med 2018: 378;19.
5. Adherence and health care costs. Iuga AO and McGuire MJ. Risk Manag Helathc Policy 7:35-44, 2014. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3934668/
6. Greater Use of Preventive Services in U.S. Health Care Could Save Lives at Little or No Cost. Michael V. Maciosek, Ashley B. Coffield, Thomas J. Flottemesch, Nichol M. Edwards and Leif I. Solberg. Health Affairs 29: 2010;1656–1660. https://www.ncbi.nlm.nih.gov/pubmed/20820022
7. Healthy Aging Brain Center improved care coordination and produced net savings. French DD, LaMantia MA, Livin LR, Herceg D, Alder CA, Boustani MA. Health Affairs 2014;33:613-8. https://www.ncbi.nlm.nih.gov/pubmed/24711322
8. Adding value to relative-value units. Stecker EC and Schroeder SA. N Engl J Med 2013;369 (23):2176-79. https://www.nejm.org/doi/10.1056/NEJMp1310583?url_ver=Z39.88-2003&rfr_id=ori%3Arid%3Acrossref.org&rfr_dat=cr_pub%3Dwww.ncbi.nlm.nih.gov
9. Principles Supporting Dynamic Clinical Care Teams: An American College of Physicians Position Paper. Robert B. Doherty and Ryan A. Crowley, for the Health and Public Policy Committee of the American College of Physicians. Ann Intern Med 2013:159;620-626. http://annals.org/aim/fullarticle/1737233/principles-supporting-dynamic-clinical-care-teams-american-college-physicians-position
10. Making It Safe to Grow Old: A Financial Simulation Model for Launching MediCaring Communities for Frail Elderly Medicare Beneficiaries. Antonia K. Bernhardt, Joanne Lynn, Gregory Berger, James A. Lee,Kevin Reuter, Joan Davanzo, Anne Montgomery and Allen Dobson. The Milbank Quarterly, 2016;1-29. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5020161/
RESEARCH FOUNDATION REPORTS:
1. Uncompensated Care for the Uninsured in 2013: A Detailed Examination. Teresa A. Coughlin, John Holahan, Kyle Caswell, and Megan McGrath. www.kff.org. May 30, 2014 https://www.kff.org/uninsured/report/uncompensated-care-for-the-uninsured-in-2013-a-detailed-examination/
2. Chronic Care: Making the case for ongoing care. Anderson, GF. Princeton, NJ: Robert Wood Johnson Foundation. 2010. The Effects of Medicaid Expansion under the ACA: Updated Findings from a literature Review, Larisa Antonisse, kff.org, Sep 2017 https://www.rwjf.org/en/library/research/2010/01/chronic-care.html
3. Best Care at Lower Cost: The Path to Continuously Learning Health Care in America (2013). The National Academies Press Open Book. http://www.nationalacademies.org/hmd/Reports/2012/Best-Care-at-Lower-Cost-The-Path-to-Continuously-Learning-Health-Care-in-America.aspx
4. How have providers responded to the increased demand for health care under the Affordable Care Act? Wishner JB and Burton RA. Urban Institute, November 2017. https://www.rwjf.org/en/library/research/2017/11/how-have-providers-responded-to-the-increased-demand-for-health-care-under-the-aca.html
5. The cost and volume of comparative effectiveness research. In Learning what works: Infrastructure required for comparative effectiveness research: Workshop summary. Holve, E., and P. Pittman. Institute of Medicine. Washington, DC: The National Academies Press. 2011:89-96. https://www.nap.edu/read/12214/chapter/2#10
6. Employer Health Benefits: 2017 Annual Survey. Gary Claxton, Matthew Rae, Michelle Long, Anthony Damico, Gregory Foster and Heidi Whitmore. The Kaiser Family Foundation and Health Research & Educational Trust. 2017. https://www.kff.org/health-costs/report/2017-employer-health-benefits-survey/view/print/
1. Centers for Medicare and Medicaid Services Financial Report, 2017. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwj63u_W0PTdAhVfIzQIHZnlAmMQFjAAegQIChAC&url=https%3A%2F%2Fwww.cms.gov%2FResearch-Statistics-Data-and-Systems%2FStatistics-Trends-and-Reports%2FCFOReport%2FDownloads%2F2017_CMS_Financial_Report.pdf&usg=AOvVaw1-Udg09bY8IZdj9vcX5H_l
2. Medicare Payment Advisory Commission. Report to Congress: Medicare Payment Policy. Chapter 13. “Status report on the Medicare Advantage Program.” March 2017. http://www.medpac.gov/-documents-/reports
Medicare for All bills before Congress
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Sen. Sanders's Medicare for All Bill (S. 1129)
[The full text of S. 1129 is available here.]
OVERALL SUMMARY: Sen. Sanders' bill provides no estimates of the costs, savings or financing of his bill. It recommends making private insurance that duplicates services covered by Medicare for All illegal, which will be difficult for insurance companies to comply with and for the government to enforce (this is a feature that Sen. Warren's plan likely shares). It recommends a large bureaucracy to develop global budgets that the government has no experience doing and may result in rationing of care. It does not take into account the fact that Medicare currently uses private health insurance companies to process all its claims and has no experience doing this itself. It is vague about the expansion of benefits, which may be overly generous. It keeps long-term care (nursing home) benefits under Medicaid, which misses the opportunity to relieve states of this large cost burden and allows for too much variability in access to care. The 4-year transition is a good idea, but does not have any incentives for people to enroll in Medicare, since the premiums will be much higher than they will be able to get from their employers. It recommends drug negotiations, with a backup prices if they fail of those paid by the Veteran's Administration or Medicaid. On his website, on the other hand, he says prices will be pegged at the median paid by five major countries, expecting this to reduce prices 50%, which is not realistic. He also expects unspecified reduction in administrative costs (previous statements suggest he expects more savings than may be realistic).
Rep. Jayapal's Medicare for All Bill H.R. 1384
[The full text of H.R. 1384 is available here.]
OVERALL SUMMARY: Rep. Jayapal's bill has many of the same problems of the Sanders bill (see above). It makes private insurance that duplicates services covered by Medicare for All illegal, which will be difficult for insurance companies to comply with and for the government to enforce (this is a feature that Sen. Warren's plan likely shares). It recommends a large bureaucracy to develop global budgets that the government has no experience doing and may result in rationing of care. It does not take into account the fact that Medicare currently uses private health insurance companies to process all its claims and has no experience doing this itself. It is vague about the expansion of benefits, which may be overly generous. It also recommends global budgets to control costs, which may lead to rationing of care. One advantage it has over the Senate bill is that it incorporates long-term care into Medicare for All instead of leaving it with Medicaid and the states. This would relieve states of a large cost burden and help equalize access to care across the country. A disadvantage of the bill compared to the Senate version is the short transition period--only two years. This does not seem a reasonable time frame to complete the changes that will be necessary. Like the Senate version, Rep. Jayapal's bill does not have any details about costs, savings, or revenues. There are some general suggestions about new taxes that seem neither necessary nor sufficient to cover the cost of the program.
Sen. Sanders's Plan for Financing Medicare for All
SUMMARY: Sen. Sanders has proposed a financing plan for Medicare for All that compares favorably with ACAMFA’s plan. To raise $17.5 trillion over 10 years, Bernie Sanders proposes income-based premiums paid by individuals and employers, both excluding baseline amounts to protect low-income families and small businesses. In addition to elimination of “health tax expenditures” (presumably subsidies), these would raise more $12 trillion. Bernie would also reinstate a number of tax policies that have been eliminated over the years and make some other changes to current policy. These together would add another $5.5 trillion. All of these proposals seem modest, reasonable, and in keeping with current economic methods. We think economists have overstated the cost of his proposal and underestimated the savings (as with Warren's plan, see below). We think only $8 trillion over 10 years would be needed and could be accomplished with lower employer premiums and without the need for the income from tax changes (which could be used to support other goals). Bernie’s proposal for income-based premiums and payroll taxes is similar to ACAMFA’s proposal and has some additional attractive features. His proposals are listed on Bernie's website.
Current government spending on healthcare is $3 trillion/yr; over 10 years that would be $30 trillion.
Over the next 10 years, the cost is projected to increase to $52 trillion.
According to an analysis by epidemiologists at Yale University, Bernie’s proposal would save $5 trillion over 10 years, so the cost under Medicare for All would be about $47 trillion.
The additional funding needed for Medicare for All is projected to be about $47 trillion minus the current expenditure of $30 trillion or $17.5 trillion.
1. A 4% income-based premium paid by individuals. The first $29,000 in income would be excluded for a family of four. (Presumably, this example is used to indicate that income below 110% of the federal poverty level would be excluded.) He estimates this would raise about $4 trillion over 10 years. COMMENT: This would make sure that most would pay no more than they would under the ACA guidelines for subsidies, but would do away with the need for paperwork, waiting for credits, or applying for special programs, like Medicaid or CHIP. However, under the ACA, those with income between 110% and 138% of the federal poverty level would pay no premiums, but would have to pay under the Sanders plan. Also, we calculate only about $3 trillion in premiums over 10 years under this plan. ACAMFA’s plan also recommends a premium for individuals, with increases based on income (like standard Medicare) and has subsidies for low income (like the ACA). ACAMFA’s plan has the advantage of being more similar to current practice, with nobody paying more than under ACA guidelines during transition and adopts the simplicity of the Sanders plan after transition. Both plans avoid the problem with the ACA of market-based premiums that can be too expensive.
2. A 7.5% income-based premium paid by employers. The first $1 million in payroll would be exempt to protect small businesses. He estimates this would raise $5.2 trillion over 10 years. The average small business (<100 employees) has a payroll of $300,000, so few if any small businesses would pay premiums. The average cost of health care for businesses is 8.3%. About half of small businesses currently offer no health insurance. This proposal would save money for all businesses and for most small businesses, except that he also recommends increasing the corporate income tax (see below). COMMENT: ACAMFA’S plan calls for a similar employer premium, but at a lower rate of 6% (because we assume a lower cost for Medicare for All). We would also exclude initial payroll, but at the lower level of $500,000. We essentially agree with the estimate for revenue (we calculate $5.1 trillion). ACAMFA’s proposal would raise $3.9 trillion over 10 years, saving private businesses over $240 billion a year and government employers almost $120 billion in healthcare premiums each year.
3. Eliminate health tax expenditures. This is projected to raise $3 trillion over 10 years. Bernie does not explain this further, but this probably refers to tax subsidies, which the Congressional Budget Office recently estimated to cost the government $0.3 trillion a year (this includes subsidies for the Affordable Care Act). COMMENT: The Congressional Budget Office estimate was before the Tax Cut Act of 2017. Taking that into account, as well as the cost of the employer premiums (which would have to be deductible as expenses), the savings would be somewhat less. If the corporate tax rate is increased, as Bernie proposes (see below), the effect of the Tax Cut Act would be lessened. The revenue raised would probably be closer to $2 trillion over 10 years.
4. Raise the top marginal tax rate to 52% on income over $10 million. This would raise $0.7 trillion over 10 years. COMMENT: This is a modest proposal, especially as some of the very wealthy have suggested they should be paying higher taxes.
5. Cap all itemized deductions at $50,000 (for married couples filing jointly), replacing the current cap of state and local taxes. It would raise $0.4 trillion over 10 years. COMMENT: This is a modest proposal that is more equitable than focusing on state and local taxes. It is simpler and more effective than the alternative minimum tax. It should be indexed for inflation.
6. Eliminate special treatment for capital gains and tax them at the same rate as other income. Crack down on tax-avoidance schemes. Revenue raised $2.5 trillion. COMMENT: This seems like a reasonable proposal. No value has ever been shown for the special treatment of capital gains.
7. Return the estate tax exemption to the 2009 level of $3.5 million, close loopholes and add a top rate of 77% on estates in excess of $1 billion. This would raise $0.3 billion over 10 years. COMMENT: This seems like a reasonable proposal to return to more normal levels of taxation that would prevent hoarding of wealth and keep money in circulation to keep the economy healthy.
8. Return the corporate tax rate to 35%. Revenue raised, $3 trillion, of which $1 trillion would be used for Medicare for All. COMMENT: This is a modest proposal, but there are also arguments for maintaining a lower corporate tax rate. It may not be an essential part of financing for Medicare for All.
SUMMARY COMMENT: All of the proposals are moderate and reasonably accurate. We believe the cost estimates are exaggerated and the savings estimates are underestimated. Our calculations suggest that excess costs are only $22 trillion, and savings are $14 trillion with only $8 trillion in financing required. Bernie’s non-tax proposals are therefore most important—they would raise $11.2 trillion by our calculations (more than enough), and if our proposal for a lower employer-based premium were used (4.5%), there would still be ample revenue ($8.7 trillion). Although we do not think Bernie’s tax proposals are required to finance Medicare for All, we think most of them are also moderate and have considerable merit on their own. Bernie’s proposals show that Medicare for All is financially achievable, even with very conservative estimates of high costs and low savings for Medicare for All.
Sen. Warren’s Plan for Financing Medicare for All
OVERALL SUMMARY: Sen. Warren provides a detailed list of ways to save money and finance Medicare for All. She does not provide details about cost estimates. We think her analysts have dramatically overestimated the costs of her Medicare for All plan and missed several opportunities for savings. We think her savings estimates may ultimately be shown to be too high by potentially as much as $3 trillion and her revenue estimates by as much as $5 trillion. Her redirection of $8.8 trillion from employers may be unrealistic and seems unbalanced. Her redirection of $6 trillion from states and local governments is a missed opportunity, in our opinion. Altogether, the overestimates on costs likely balances out the overestimates on savings and revenues, although the lack of cost detail hinders our analysis. [ACAMFA has a plan that details costs, savings and revenues that does not require any new taxes and has a balanced approach to savings for individuals, employers, and state and local governments.You can see a brief review of ACAMFA's plan on this page, or take a look at our comprehensive analysis.]
1. Warren estimates that total healthcare expenditures under Medicare for All, given her policies, will be essentially unchanged compared to spending under current law, despite dramatically increased benefits. She does not specify the cost calculations, relying instead on an analysis by independent economists.
2. She estimates that Federal expenditures would be about $34 trillion higher over 10 years without counting savings.
3. She plans to redirect $6 trillion from money currently spent by state and local governments to help pay for Medicare for All and save over $7 trillion through various aspects of the program, both over 10 years.
4. She will then use several methods to raise a little over $20 trillion over 10 years to get the rest of the money the Federal government will need.
There are four parts to Warren’s financial plan: 1) costs 2) savings 3) redirecting of money, and 4) revenue. She does not provide enough information about costs to analyze them, so we will not comment on that further. We will look at each of the other components in detail.
1. Savings: SUMMARY—Warren estimates $7.5 billion in savings over 10 years from various features of her plan. ACAMFA thinks her estimates could be about $3.2 trillion too high. We think savings of $4.2 billion from her plan would be more realistic.
a. Administrative. Warren assumes administrative costs under Medicare for All will equal administrative costs of standard Medicare (2.3%) compared to the costs of private plans, which average 12.2%. She estimates this would save $1.8 trillion over 10 years. ACAMFA has identified two problems with this analysis. First, there will be about 67 million people on Medicaid and CHIP who will be covered under Medicare for All. The average administrative cost of these plans is about 10.9%, much of which is due to the cost of private plans that administer Medicaid managed care. It is not clear whether the savings Warren calculated discounted for the lower cost of administration of current standard Medicaid patients. A larger problem is that keeping the cost of administration as low as current levels will preclude the improvements in claims processing that will be needed to make Medicare for All more efficient and save billions of dollars each year. We think this estimate may be high by about $600 billion.
b. Drug savings. Warren plans to use several existing laws to negotiate prices with drug companies, including methods to ensure that drugs developed with the assistance of federal funds are helping public health and safety. She plans to save $1.7 trillion over 10 years. Although these plans are laudable, her projection of 70% decrease in brand name drug prices and 30% decrease in generic drug prices does not seem realistic. If price of drugs in the developed countries of the world were averaged and all countries paid the same price, the cost of drugs in the U.S., which currently has the highest prices in the world, would drop only 17%. However, Germany has a strict model for drug negotiation and price control and has the 3rd highest costs in the world. If the U. S. paid the same prices for drugs as Germany per person, our costs would decrease 30%. We think a 30% decrease is a much more reasonable goal. We think her estimate of drug savings could be $600 billion too high.
c. Payment reform. Warren plans to save $2.9 trillion over 10 years through various payment reforms. She will:
i. reduce payments to providers to Medicare rates, except hospitals will receive Medicare rates +10%. She notes that this is feasible because of decreased provider expenses wasted on billing and insurance related costs, no unreimbursed care, and increased reimbursement for uninsured (she fails to mention increased reimbursement for underinsured, who often are unable to pay coinsurance).
ii. bundle payment for hospital care with the care given for 90 days after a hospital stay
iii. equalize payments for the same service in different settings
iv. encourage new payment models, like accountable care organizations (ACOs)
We think the rationale for payment reductions is sound, although further modifications would help offset practice losses (like increased reimbursement for other services). We doubt the bundling of services will be as successful as she predicts as such schemes are always susceptible to gaming. We are very wary of new payment models, especially ACOs, as they have not consistently been shown to decrease costs. Although we believe some new payment models may be able to reduce costs, we do not think Warren’s hold much promise, especially with the administrative budget she has planned. We think her estimate for savings might be at least $900 billion too high.
d. Decreased cost growth. Warren expects the growth in cost of medical care to match that of the GDP resulting in savings compared to current law of $1.1 trillion. However, Warren offers no specific rationale for the decreased growth other than that her policies will be effective in doing so. In some sense, we believe she is counting her savings twice, once in her primary analysis and again in claiming that they will reduce growth. The only other method she gives for reducing growth is using global budgets in case targets are not reached. However, developing and implementing global budgets is beyond the capabilities of the current Medicare administration. This would require a new bureaucracy and large administrative expense. It would also change the character of Medicare and introduce the kind of rationing that has not been used in the U. S. before. We think the $1.1 trillion in estimated savings is probably not justified.
2. Redirecting money: SUMARY—Warren’s plan to redirect all money currently spent by states and local governments on healthcare to Medicare for All to be a missed opportunity to relieve them of an unnecessary burden they should not have to bear. It is a missed opportunity to lower state and local taxes. Employers are also asked to make essentially the same payments as they currently do, maintaining unsustainable costs. This is another missed opportunity to improve the U. S. economy. Individuals are not asked to share costs, but indirect effects may be hard to estimate.
a. States and local governments. Warren plans to have state and local governments spend the same amount of money on healthcare they do now under Medicare for All. They will make payments equal to $6.1 trillion over 10 years to the Federal government, which equals the amount they currently pay for:
i. Medicaid and CHIP ($3.4 trillion)
ii. Private insurance premiums for their employees ($2.7 trillion)
We believe this is a missed opportunity to relieve state and local governments of the burden of healthcare costs they never should have been responsible for. Current costs are borne unequally and unfairly and have become unsupportable. It is one of the reasons Medicare for All is needed. We believe all costs for Medicaid and CHIP should be transferred to Medicare for All and the cost of private insurance should be lowered to the same level it is for everyone else. Requiring them to make these “maintenance of effort” payments, as Warren calls them, precludes the possibility of reduced state and local taxes.
b. Employers. Warren plans to have employers spend almost the same amount of money on healthcare they do now under Medicare for all. They will make payments equal to $8.8 billion over 10 years.
i. Calculated as 98% of most recent costs, but increased 2% to adjust for inflation
ii. Employers with fewer than 50 employees exempt if not currently offering insurance (with phase in of requirement to pay the average national cost of employers paying premiums)
iii. Self-employed exempt unless their income is above a threshold
iv. Payment by employer can be decreased if wages are increased via collective bargaining
v. If payments do not reach the $8.8 billion/year target, a supplemental payment from large corporations may be implemented
We think it is unwise to continue to burden employers with the high cost of healthcare they currently carry. U.S. companies are already disadvantaged compared to those in other countries due to the cost that healthcare adds to employee compensation. This is another missed opportunity to relieve that burden and improve the U. S. economy. An amount 25% to 50% lower than this would seem more prudent to us.
c. Individuals. Individuals, who are estimated to spend $11 trillion on healthcare in premiums and other out-of-pocket costs, are relieved of all costs under Medicare for All. They will pay no premiums, deductibles or copayments (except, see revenue analysis below).
We agree with the need to relieve individuals of some of the cost of healthcare, but we do not agree that individuals should be the only ones whose costs should change.
3. Revenue. SUMMARY—Warren plans to get the $11 trillion she needs over 10 years through $10.2 trillion in taxes and $0.8 trillion in decreased defense spending. We think about half may not be reasonable from a policy perspective. Also, 1.4 trillion in revenue would result in decreasing the savings for individuals to about $9.5 trillion over 10 years.
a. Taxes on increased take home pay. Since individuals will not be paying premiums, their take home pay will be higher. This will result in higher reportable income subject to taxes. The estimated increase in taxes from this source is $1.4 trillion over 10 years. (This is about 1/3 the amount individuals currently spend on premiums.) This is part of the TAX SUBSIDIES that have been paid by everyone to support employer sponsored healthcare insurance. (The other part is the deductions taken by businesses for these premiums.) This amount assumes REPEAL of the Tax Cut Act of 2017. This decreases the amount individuals save under Medicare for All from $11 trillion to about $9.5 trillion over 10 years. Without repeal of the Tax Cut Act of 2017, revenues would be about $200 billion lower. This should be considered a separately negotiable item, since repeal itself would raise about $1.9 trillion over 10 years and is not considered in Warren’s calculations of savings.
b. Targeted taxes on financial sector. Estimated to generate $0.9 trillion. The benefits of this small amount of revenue in relation to potential negative effects of the taxes are not clear.
c. Taxes on large corporations. Including repeal of accelerated depreciation and a minimum tax on foreign earnings of 35%, estimated to generate $2.9 trillion. These seem to be reasonable recommendations, but whether corporations could find ways to minimize the effects and reduce the revenue generated is unclear. The revenue estimate may be optimistic.
d. Taxes on the top 1% of earners. Including an annual 2% tax on net worth above $50 million with a 1% surcharge on net worth over $1 billion and elimination of the special capital gains tax with an accrual system of accounting for taxing gains income annually instead of at the time of sale or transfer for households at the top 1%. This is estimated to generate $3 trillion in revenue. Experts have questioned whether a direct tax on net worth is constitutional. Taxing capital gains on an annual basis does not seem reasonable, when “paper gains” may never be realized and “paper losses” may not be deductible. We do not recommend either tax.
e. Improved enforcement of current taxes. By increasing funding of the IRS, Warren estimates the gap between taxes owed and taxes collected can be decreased from 15% to 10%, as with most other countries. Enforcement would be redirected toward wealthier taxpayers. Estimated revenue is $2.3 trillion. This plan is a good one and the estimate is reasonable.
f. Immigration reform. By providing a path for citizenship for undocumented immigrants, $0.4 trillion in tax revenue could be generated over 10 years. This estimate is reasonable.
g. Repeal of the Overseas Contingency Operations Fund. This was supposed to be an emergency defense spending fund but has continued beyond its initial planned date. Discontinuation would save $0.8 trillion over 10 years. This is not revenue and decreasing defense spending, no matter how laudable, is not a reasonable policy goal in the current climate. It needs to be separately negotiated in Congress.
4.Costs. The cost of Sen. Warren's Medicare for All plan is not detailed, but is compared to an analysis performed by the Urban Institute. The analysis concludes that Federal expenditures would be $34 trillion higher over 10 years, which is less than the Urban Institute analysis and about the same as under current law. Without knowing exactly what services are included under Warren's plan, it is difficult to analyze these numbers, but our own analysis suggests that there may not have been adequate consideration given to recent data showing that increased utilization of services due to universal coverage is limited due to pent up demand and decreases after a few years, as has been shown in states that expanded Medicaid under the Affordable Care Act. It also may not have taken into account the decrease in more expensive services (like hospital care) than accompanies better access to less expensive services (like home care). These alone could account for trillions of dollars. In addition, using the same concept Warren applies to the IRS--increasing the budget to improve collections--is another simple tool for added savings. We estimate another $2 trillion over 10 years with this method.
5. Overall. Together the overestimates of costs would likely make up for the overestimates in savings and the amount that could reasonably be redirected from employers. There may be additional savings that have been missed as well. Warren has presented a number of reasonable revenue proposals, which could easily be supplemented with others to make up for the small deficits remaining from our projections and other sources could be considered to relieve states and local governments from having to make maintenance of effort payments.
Sen. Warren's plan to finance Medicare for All is detailed on her website here.
Sen. Warren's Transition Plan
SUMMARY: Sen. Warren's transition proposal includes plans to protect the ACA, allow those currently not eligible for Medicare to opt-in to Medicare for All with no premiums for those under 18 or in a family whose income is below 200% of the federal poverty level (others will pay a "modest" premium). She is vague about the benefits of the program other than increased dental benefits. Measures to lower drug prices will begin immediately using current Federal law and efforts will be made to enforce mental health parity, expand Medicaid enrollment and "end" Medicare Advantage (Part C) fraud. The details of costs, savings and revenues are not included in her plan. The extent to which her efforts will be successful, especially on enforcement and ending fraud, are unclear. It is not certain how they will be significantly more successful than efforts in the past. Without large subsidies to support premiums and subsidies for Medicare for All during transition, the number of people will want to opt-in is uncertain. These are details that could be worked out as the plan is being implemented.
Sen. Warren's transition plan is detailed on her website here.
Mayor Buttigieg's Plan for Medicare for All Who Want It (MFAWWI)
SUMMARY: Buttigieg plans to make few structural changes to the current system. He will strengthen the ACA, make ACA premiums lower, and make Medicare available to those who aren't eligible for Medicaid or ACA subsidies (including those in non-expansion states) and give them subsidies if they need them to pay for MFAWWI.Those who are uninsured will be automatically enrolled retroactively in M4AWWI. Benefits will be the same as for the ACA marketplace. Out-of-pocket costs for seniors will be capped. His attempt to enforce mental health parity may not be successful without meaningful changes in reimbursement rates to providers. His attempts at price control may be somewhat weak and difficult to manage. His only proposal for financing is repeal of the Tax Cut Act of 2017. He gives no details of costs, savings or revenues.
Mayor Buttigieg's plan for MFAWWI is detailed on his website here.
ACAMFA has a detailed plan to implement Medicare for All including complete analysis of all costs, savings and financing. If you like, you can check out our full plan details or our executive summary. A brief summary is provided below.
1. Transition. SUMMARY—ACAMFA recommends a 4-year transition period, similar to Sen. Sanders’ bill, with some changes to improve the way it works. We would change our current system gradually and as little change as possible during transition to make the move to Medicare for All smooth and easy. We anticipate with the changes we recommend a gradual increase in enrollment in Medicare and decrease in use of the ACA and employer-sponsored health insurance. As more individuals sign up for Medicare, the savings initiatives built into the transition will increase, automatically paying for any additional cost of the new enrollees beyond the premiums collected.
a. Use existing programs to continue providing insurance coverage to reduce the risk for a disruptive transition: standard Medicare, ACA exchanges, Medicaid and CHIP, and employer-sponsored health insurance.
b. Encourage expansion of Medicaid by changing the formula for federal cost-sharing to reflect the percentage of a state’s population actually enrolled in Medicaid instead of the average income of the state relative to the rest of the U.S. This will better reflect the burden of care a state is required to provide for those in need, including the working poor, disabled and elderly, and encourage states to provide care for them. This will save money by preventing more expensive care provided to the uninsured when they become severely ill and allow for them to be cared for in the home and in nursing facilities instead of getting more expensive hospital care.
c. Everyone not already on Medicare, including children, will be eligible to join Medicare by paying a premium. The cost of the premium will be set by the Secretary of Health and Human Services (HHS) to be competitive with the current cost to a family on employer-sponsored health insurance.
d. Premiums for low-income households will be subsidized to reduce their costs (their premiums will be lower—this will not be just a tax credit). High-income households may be subject to a modest surcharge.
e. Premiums would gradually increase as benefits increase.
f. Medicare payroll taxes will continue.
g. Employers will pay 6% after the first $500,ooo in payroll for the premiums of all employees who opt-in to Medicare for All (considerably lower than their current cost of healthcare expenses, 8.3%). Since the average payroll of small businesses is $300,000, most small businesses will pay no premiums.
h. Enrollment will be encouraged by gradually making Medicare more attractive.
i. Deductibles for Medicare will immediately be eliminated.
ii. Copayments for Medicare will be gradually reduced over the course of the 4-year transition from 20% to 0%.
iii. Drug benefits will be included for all Medicare enrollees. The average cost of current drug plans (Part D) will be added to the standard Medicare premium (Part B).
iv. The tax-exempt status of employer-sponsored health insurance will be gradually decreased from 100% to 0% over the course of the 4-year transition.
v. Coverage will be gradually added for dental, nursing and other professional services provided in doctors’ offices, hearing, and long-term care.
i. Medicare will negotiate prices with drug manufacturers using the well-established model used currently in Germany. This should lower prices per person by 30% (the same level as Germany currently pays).
j. All Medicare Part C plans will be required to offer the same benefits as Medicare for All. This will make them less attractive, resulting in a gradual decrease in Part C enrollment.
k. The administrative budget for Medicare will be gradually increased to allow it to pay more to private insurance companies to process its claims and improve enforcement of rules for proper billing, including the development of new tools to match procedures billed to proper situations.
l. Current loopholes in the law against self-referral of patients will be closed, reducing the excessive use of procedures by providers who own their own facilities.
m. The use of new payment models and models of care, especially for patient with chronic disease, that have been shown to improve care and reduce costs will be encouraged.
n. The use of nurse practitioners and physician assistants will be encouraged with improved reimbursement to practices.
2. Full implementation: SUMMARY—After full implementation all the methods used during transition to reduce costs will be continued. Everyone will be enrolled on Medicare for All, including everyone previously on Medicaid and CHIP. States and local governments will no longer be responsible to pay for those programs. Their employees will pay premiums and they will pay 6% after the first $500,000 of payroll to Medicare for All like all other employers, saving them almost $300 billion a year ($3 trillion over 10 years). Private employers will save over $240 billion a year by having all their employees on Medicare for All ($2.4 trillion over 10 years). Individuals will see their premiums (adjusted for income) decrease by almost $290 billion and their other out-of-pocket costs go down over $270 billion, minus about $90 billion increase in taxes due to elimination of subsidies for tax-exempt premiums (mostly paid by wealthier taxpayers) for total savings of almost $470 billion a year ($4.7 trillion over 10 years). We expect the balance to be sufficient for small net revenues each year. Premiums will be automatically deducted or added to income taxes for ease of collection. Nobody will be denied coverage for lack of paying premiums. Premiums and payroll taxes may be phased out over time. We have detailed all costs, savings and financing related to implementing a comprehensive Medicare for All plan. [Note: the figures in this brief summary are calculated to match as closely as possible the calculations used by Sens. Warren and Sanders. This summary also rounds numbers for ease of presentation. They therefore differ somewhat from our comprehensive analysis, which uses somewhat different categories for some costs and savings. The accuracy of our calculations, however, will be found to be unchanged.]
a. Costs: SUMMARY—We estimate the cost of increasing coverage to all residents (universal coverage) and increasing services to cover all essential needs (comprehensive coverage) to be about $2.3 trillion a year. Another $110 billion a year is recommended for additional program support (decreasing to $50 billion after year 5) for a total of about $2.4 billion a year ($24 trillion over 10 years). Amounts below are annual costs.
i. Cost of increasing coverage to all (new enrollees): about $1.8 trillion (including increasing payment for Medicaid and CHIP to Medicare rates)
ii. Cost of increasing services covered (including elimination of coinsurance): about $500 billion
1. Dental care: $14 billion
2. Nurse and other professional visits: $19 billion
3. Elimination of deductibles: $8 billion
4. Short- and long-term care: $265 billion
5. Hearing care: $12 billion
6. Elimination of copayments: $169 billion
7. Additional dental care and transportation for Medicaid eligible: $16 billion
iii. Cost of additional support programs: $110 billion ($50 billion after the first 5 years)
1. $20 billion to increase Medicare administrative budget
2. $15 billion for additional biomedical research
3. $15 billion for advanced practitioner training
4. $15 billion for graduate medical training
5. $15 billion for additional professional and dental support
b. Savings: SUMMARY—We estimate single-payer healthcare and other policies to result in savings of $1.4 trillion a year. Counting funds previously spent by the Federal government on programs now included in Medicare for All (Medicaid, CHIP and ACA subsidies), savings total $1.8 trillion a year. The net cost of the program is about $600 billion a year ($6 trillion over 10 years). Amounts below are annual savings.
i. Cost of administration: $148 billion
ii. Elimination of uncompensated care: $59 billion
iii. Improved use of current tools to reduce waste: $239 billion (includes audits of outliers, linking claims to diagnoses and other demographics, quality initiatives, use of guidelines, electronic medical records)
iv. Improved chronic disease management: $59 billion (includes reduction of inefficient delivery and mis sed prevention under single-payer)
v. New payment and care models: $201 billion (includes reduction in fraud, missed prevention, inefficient delivery, and unnecessary services)
vi. Decrease cost of drugs: $108 billion (using German model for negotiation with 30% decrease in cost)
vii. Decrease cost of devices: $6 billion (bulk negotiation, assuming 10% decrease)
viii. Decrease provider administrative costs: $75 billion
ix. Elimination of excessive pricing: $133 billion (Medicare prices)
x. Close Stark (self-referral) loopholes: $68 billion (reduced unnecessary services)
xi. Promote use of advance practitioners: $42 billion
xii. Decrease in hospitalizations: $123 billion (10% decrease due to increased access to drugs and physician visits and increased coverage for long-term care)
xiii. Funds previously spent on ACA, Medicaid, CHIP: $450 billion
c. Financing: SUMMARY—The cost of Medicare for All will be financed through continued premium payments and payroll taxes. Part A payroll taxes will remain unchanged. Individuals will pay premiums at 5% of household income after excluding the amount equal to the federal poverty level ($35,511 for a family of four). They will save about $290 billion a year in premiums in addition to more than $270 billion in other out-of-pocket costs. However, since some of the premiums paid by individuals were tax-exempt, the increased income from them will be taxable, saving the Federal government another $130 billion a year (about $45 billion from businesses), but reducing savings to individuals (mostly wealthier ones). Total savings for individuals will be almost $470 billion a year ($4.7 trillion over 10 years). Employers will pay 6% after the first $500,000 of payroll. Private businesses will save about $240 billion a year ($2.4 trillion over 10 years). Total premiums are estimated to equal about $660 billion a year. With the additional $130 billion saved in tax subsidies, revenues are $7.9 trillion over 10 years, more than enough to fund the program. (We anticipate small net revenues each year after implementation.)
i. Premiums from those on previously on Medicare will continue but will be calculated in the same manner as those newly enrolled on Medicare for All (see below). Part D (drugs) will be discontinued--the cost will be included in the Part B premium.
ii. Premiums from those newly enrolled on Medicare for All will be 5% of household income after excluding the amount equal to the federal poverty level ($35,511 for a family of four). A family of four earning $75,000 a year would pay an annual premium of $1,974 (166.54 a month). A family of four earning $150,000 a year would pay an annual premium of $5,724 ($77.04 a month). On average, an individual would pay $2,500 a year, each child would cost $1,000, and a family of 4 would pay $7,000 a year ($580/month). Those with income below the federal poverty level would pay no premiums. There would be no deductibles or copayments and all drugs would be covered completely. Total annual premiums collected from individuals would be $343 billion. Premiums would be automatically deducted from payroll or Social Security, paid directly or added to income tax. Nobody would be denied coverage due to failure to pay premiums.
iii. Employers will be asked to pay 6% after the first $500,000 of payroll to supplement the cost of premiums for their employees. Small employers (with fewer than 100 employees) have an average payroll of $300,000, so few of them would have to pay any premiums. Total payments collected from employers is projected to be $343 billion a year.
iv. Tax exemptions for employer-sponsored health insurance resulted in about $200 billion in lost revenue. We estimate after the effects of the Tax Cut Act of 2017 and accounting for the exemption for businesses for their cost of premiums, the Federal government will receive additional revenues of $131 billion a year due to no longer subsidizing private health insurance sponsored by employers.
v. Unearned income from individuals with income above a threshold will also contribute toward Medicare for All premiums to ensure that workers are not unfairly shouldering the costs. Total income from these premiums is projected to be $4 billion a year.
vi. Enrollment will be automatic. Premiums will be paid by automatic deduction from payroll or Social Security payments and other individuals may opt to pay premiums directly or have the cost added to their annual income tax, which would be the default (low-income individuals not subject to tax would be eligible for subsidies that would eliminate their costs). Nobody would be denied coverage due to lack of payment of premiums.
See also ACAMFA's 7-step path to universal healthcare:
Brief review of 7-step path to universal healthcare
Details of 7-step path to universal healthcare
Public Option Bills
SUMMARY: Public option bills are similar to the transition period of Medicare for All plans--they increase the number of people eligible to enroll (opt-in) to a public insurance plan (Medicare). The more a public option bill increases the benefits offered under Medicare, provides subsidies for premiums for those who can't afford them, limits out-of-pocket costs for individuals, and overall makes the public option more attractive than private insurance, the more it resembles a well-structured Medicare for All transition period. A really good public option bill would leave few people staying on their private insurance. The major differences between the different public option bills and the different Medicare for All plans are more in the details than the principles.
Public option bills offer the opportunity for those not currently on Medicare to opt-in to the program. They differ in a few basic ways:
1. Who is eligible to opt-in.
2. Whether premiums need to be paid, and if so, who is eligible for subsidies for lower premiums.
3. What benefits are covered. Are they the same as Medicare? Enhanced benefits? The same as the ACA? Better? There are a lot of differences.
4. How is it administered? Most are set up to compete with insurance plans on the ACA, but there are differences among the plans.
5. Are there other aspects of the healthcare system that are changed?
Despite these differences, they all have the basic goals of some combination of increasing the number of people who have adequate health insurance and improving the quality of healthcare people receive. Most have fewer opportunities for savings than would be available under Medicare for All.
See this chart of the different public option plans before Congress. You can also check our summary of Mayor Pete Buttigieg's public option plan, Medicare for All Who Want It, on this page, or his complete discussion on his website, here.